Mainframes Provide Fast-Track Access to Private Cloud Benefits for Enterprises, Process Ecosystems

Transcript of a BriefingsDirect podcast on the role and benefits of mainframes and their position as private cloud infrastructure in today's efficiency-minded enterprises.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod and Podcast.com. Learn more. Sponsor: CA.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, we present a sponsored podcast discussion on how mainframes can help enterprises reach cloud-computing benefits faster.

We'll be looking at what defines cloud computing, with an emphasis on private clouds or those computing models that enterprises can control on-premises, but that also favor and provide cloud-like efficiency with lower-end costs and a heightened ability to deliver services that support agile business processes.

We'll examine how new developments in mainframe automation and supporting the use of mainframes allow for cloud-computing advantages and the ability to solve some of the more contemporary computing challenges.

To help us understand how mainframe is the cloud, we're joined by Chris O'Malley, executive vice president and general manager for CA's Mainframe Business Unit. Welcome to the show, Chris.

[UPDATE: CA's purchase today of some assets of Cassatt bolsters the role of mainframes' and CA's management capabilities as foundations for private cloud efficiencies.]

Chris O'Malley: Dana, thank you very much. I'm glad to be here.

Gardner: Chris, we've heard a tremendous amount about cloud computing and there's a buzz around this whole topic. From your perspective, what makes cloud so appealing and feasible right now?

O'Malley: Cloud as a concept is, in its most basic sense, virtualizing resources within the data center to gain that scale of efficiency and optimization you just discussed. It's a big topic of discussion right now, especially given the recession we're sitting in.

It's very visible physically that there are many, many servers that support the ongoing operations of the business. CFOs and CEOs are starting to ask simple, but insightful, questions about why we need all these servers and to what degree are these servers being utilized.

When they get answers back and it's something like 15, 10, or 5 percent utilization, it begs for a solution to the problem to start bringing a scale of virtualization to optimize the overall data center to what has been done on the mainframe for years and years.

We're now seeing the availability of the technology -- VMware is an example -- to start to create almost mainframe-like environments on the distributed side. So, it's both the need from a business standpoint of trying to respond to reduced cost of computing and increased efficiency at a time when the technologies are becoming increasingly available to customers to manage distributed environments or open systems in a way similar to the mainframe.

Gardner: I suppose there's also an issue around integration. When people talk about cloud computing, we hear them refer to it as an application-development or platform-as-a-service (PaaS) affair. We also hear software as a service (SaaS) or just great delivery of the applications. Then, there's this notion of infrastructure fabric or infrastructure as a service (IaaS).

But, to relate and manage all of those things is something we haven't yet seen in this whole cloud market. I imagine that at a private level, if you were to use mainframe and associated technologies, you might start to see some of those integration points among these different levels or aspects of cloud computing.

O'Malley: You're right. It's a maturity curve that we're going through, and it's very likely that larger customers are using their mainframe in a highly virtualized way. They've been doing it for 30 years. It was the genesis of the platform. It's a fixed asset that was very expensive way back, or at least relatively expensive, that they try to get as much out of it as they possibly can. So, from its beginning, it was virtualized.

You see the same big customers, though, having application needs outside of what they've done themselves. What customer relationship management (CRM) and salesforce.com have done creates a duality of the mainframe acting as a cloud and using SaaS to support how they work their markets. It's very important that those things start to become integrated. CRM obviously fits into things like order entry, and tying those efforts together.

As you go through this maturity cycle, there is always a level of effort to integrate these things. The viability of things like salesforce.com, CRM, and the need to coordinate that data with what for most customers is 80 percent of their mission-critical information residing on the mainframe is making people figure out how to fix those problems. It's making this cloud slowly, but pragmatically, come true and become a reality in helping to better support their businesses.

Gardner: So, that would lead, at some point, to a cloud of clouds and hybrid models. We've been worried about integration vertically and now horizontally. I suppose we'll have to start worrying about it across organizational boundaries as well.

Barriers to adoption

O'Malley: Absolutely. There are other barriers that exist as well. The distributed environment and the open-system environment, in terms of its genesis, was the reverse of what I described in the mainframe. The mainframe, at some point, I think in the early '90s, was considered to be too slow to evolve to meet the needs of business. You heard things like mounting backlog and that innovation wasn't coming to play.

In that frustration, departments wanted their server with their application to serve their needs. It created a significant base of islands, if you will, within the enterprise that led to these scenarios where people are running servers at 15, 10, or 5 percent utilization. That genesis has been the basic fiber of the way people think in most of these organizations.

It's not just the technical barriers and the complexity of it. It's a cultural shift of an acceptance by players across the business. They all start to use a shared commodity in fulfilling their needs, and the recession helps that. Good CEOs and good CFOs never let a recession go to waste. They explain to their executive management, "We need a greater level of efficiency. We need to transform our thinking, so that we can start to take advantage of these technologies, decrease our overall cost, and increase our ability to serve our market."

They are not just technical issues. There is also people's disposition on the way IT should be run. That has to change as well.

Gardner: I suppose we've gone along with the pendulum swing, from centralized, to decentralized, and now we're coming back. I've spoken to a number of people that say the shortcomings of distributed computing are, in fact, the set of requirements for cloud computing. Do you agree with that?

O'Malley: I absolutely do. This 15 or 10 percent utilization is what we consistently see, customer after customer after customer. Recently, I was with an international customer. They took me on a data center tour, and one of the first things I see is an air conditioning unit the size of a school bus. I see walls that are three-and-a-half feet thick, poured

Time and time, I hear there is not a CEO or a CFO interested in adding yet another square foot of data-center floor space or adding people to manage the environment at a scale equal to the increasing capacity.

concrete. I see cabling that looks like it weighs tons and football fields of floor space. In the midst of the tour, somebody tells me, "Here is a blade server that cost us next to nothing."

The difficulty in bringing and using these things in an efficient fashion, the cost of all those moving parts, and everything that has to be managed as a single thing, rather than in a virtualized form, has caused a scale of waste that you cannot hide.

Time and time, I hear there is not a CEO or a CFO interested in adding yet another square foot of data-center floor space or adding people to manage the environment at a scale equal to the increasing capacity. They should be getting economies of scale and are just not seeing it.

You're seeing the pendulum come back. This is just getting too expensive, too complex, and too hard to keep up with business demands, which sounds a lot like what people's objections were about the mainframe 20 years ago. We're now seeing that maybe a centralized model is a better way to serve our needs.

Gardner: A lot of what attracts people to the cloud model -- because it is still rather amorphous, and not well-defined -- is this notion of elasticity. That's both, as you say, to help on utilization when it's low, but also to allow for the spikes to be managed externally or to take workloads and apply them across multiple machines in the case of a private cloud.

O'Malley: Exactly.

Gardner: How do you see this attraction to elasticity of compute resources and infrastructure? How does that relate to where the modern mainframe is?

On-demand engine

O'Malley: The modern mainframe is effectively an on-demand engine. IBM has created now an infrastructure that, as your needs grow, for example, you need to turn on additional engines that are already housed in the box. With peak processing in December around the retail uptake -- it will happen again here in the not too distant future -- or a quarter end for most organizations, they have the capacity to turn engines on and off and then be charged effectively, like a utility.

With the z10, IBM has a platform that is effectively an in-house utility and, obviously, outsourcers offer that option in a purer fashion. This is not the mainframe your grandpa bought in 1976. It had always been a strong platform in terms of being able to drive high degrees of utilization. You don't see a bad mainframe customer. They're all at 95 percent throughput on those processors.

Now, with the z10 and the ability to expand capacity on demand, it's very attractive for customers to handle these peaks, but not pay for it all year long. So, that's strength. Obviously, with companies like Salesforce.com, that's an option on the distributed side as well. You're paying for only that which you need at a given moment.

Gardner: Another issue that I've encountered in exploring these cloud issues is a common idea that this is for commodity-level services -- email, maybe some business applications, sales-force automation, CRM, for example. But, those peaks and troughs are also something that affect mission-critical applications, particularly if they're batch or something to be done at a certain frequency.

How do you take advantage of the compute capacity, when you're in between those frequencies and those batches? Do you see cloud computing as something that is destined for commodity-level IT,

The attributes that make up that which is required for a mission-critical application are basically what make your brand. So, the mainframe has always been the home for those kinds of things. It will continue to be.

or is this something that also makes a great deal of sense for the most mission-critical types of transactions and applications?

O'Malley: As it specifically relates to mainframe, it absolutely does. The mainframe has always been the home, if you're a manufacturer, for your logistics, which sit on the mainframe. It's a core process to the organization.

If you're a bank, the ATMs, the DDL, all of that stuff tends to be mainframe apps. You're right. There's a strong variability in the types of processing that is, in fact, being done. The hardware allows you the capacity to handle those things and reduce your consumption in a way that affects your cost.

Gardner: It's the virtualization, management, and governance of what's going on with the infrastructure that's the genesis of this elasticity. I think what you're describing is a value-add on top of the platform.

O'Malley: Absolutely. The mainframe has always been very good at resilience from a security standpoint. The attributes that make up that which is required for a mission-critical application are basically what make your brand. So, the mainframe has always been the home for those kinds of things. It will continue to be. We're just making the economics better over time. The attributes that are professed or promised for the cloud on the distributed side are being realized today by many customers and are doing great work. It's not just a hope or a promise.

Gardner: There is some disconnect, though, cultural and even generational. A lot of the younger folks brought up with the Web, think of cloud applications as being Web applications, built with scripting languages, perhaps delivered with rich interfaces, but primarily Web applications.

But, there's nothing to say that a Web application, a client-server application, a virtualized application, or even a virtualized desktop -- referred to as virtualized desktop infrastructure (VDI) -- can't find a place on a mainframe that supports different applications and different platforms beneath those applications.

Moving away from green screen

O'Malley: Correct. As an example, Linux runs on the mainframe. Just to take what you're saying a little bit deeper and state the obvious, one of the knocks on the mainframe is that it's the home of green screens. It was put to me recently by a customer that it's like showing garlic to a vampire. They just don't see that as the answer to the future, and it's not driving them to want to work on a platform that looks like it came out of 2001: A Space Odyssey or something.

Despite all these good things that I've said about the mainframe, there are still some nagging issues. The people who tend to work on them tend to be the same ones who worked on them 30 years ago. The technology that wraps it hasn't been updated to the more intuitive interfaces that you're talking about.

So, CA is taking a lead in re-engineering our toolset to look more like a Mac than it does like a green screen. We have a brand new strategy called Mainframe 2.0, which we introduced at CA World last year. We're showing initial deliverables of that technology here in May. The first thing that we're coming out with is a common service that looks in every way like InstallShield from the mainframe.

If you were to walk up to a 22-year-old system programmer and looked over their shoulder, there's no way that you'd see any difference between what they were working on and what somebody may be working on in the open-system side.

So, you're right that the mainframe technologically can do a lot, if not everything you can do on the distributed side, especially with what z/Linux offers. But, we've got to take what is a trillion dollars of investment that runs in the legacy VOS environment and bring that up to 2009 and beyond. CA, through our strategy of Mainframe 2.0, is in

We've had a cloud for 40 years. It’s called 'the mainframe.'

fact making that happen relative to the usage of our technology, but ultimately in terms of how the day-to-day workers interact with the mainframe and having it look, we believe, even more productive than what they're accustomed to on a distributed platform.

Gardner: It sounds as if we're really dealing with semantics as it addresses infrastructure. If you have a person who's been in the business for several decades and has some experience and you want to reassure them, you could say. "Well, it's running on the mainframe," they'll probably feel good about that. For somebody a little bit younger, you might say, "Well, it's running on the private cloud." It's really the same thing.

O'Malley: Absolutely. I listened to VMware presentation the other day, and they were, I think, speaking with ADP. I think that's what they said. They described the cloud. At the end of it, they said, "We've had a cloud for 40 years. It’s called 'the mainframe.'" But, you're right. It becomes semantics at that point. People will think differently. The mainframe has an image that will be altered dramatically with what we're doing with Mainframe 2.0.

It has its virtues, but it has its limits. The open system has its virtues and has its limits. We're raising the abstract to the point where, in a collective cloud, you're just going to use what's best and right for the nature of work you're doing without really even knowing whether this is a mainframe application -- either in z/OS, or z/Linux -- or it's Linux on the open system side or HP-UX. That's where things are going. At that point, the cloud becomes true in the promise where it's being touted at the moment.

Gardner: What about this? Going back to the issue to integration, if there is been this long-term ability to manage virtualized instances on the mainframe, eventually, as we get into this cloud of clouds and hybrid model future scenario, the buck must stop some place.

There's going to need to be one throat to choke somewhere, even if the services are emanating from a variety of sources. Is it a stretch to think that your on-premises mainframe that's being used as a cloud would also become a hub, rather than a spoke, in terms of how you would govern, manage, and integrate across multiple cloud types of implementation?

Benefits of centralization

O'Malley: One of the aspects that's wonderful about the mainframe is that the scale of discipline allows a very few people to manage a very large environment. That's been developed over 40 years and really is the benefit of this centralized model.

Increasingly, we're seeing customers come to the conclusion that there are certain things -- security and storage management for example -- that have been perfected in terms of their optimization and efficiency on the mainframe.

You're right. They're thinking of how to take certain disciplines that would probably be best done by the hub or the mainframe to manage the overall environment. That's definitely what we're thinking about from a strategy perspective. Security and storage management are two strong examples of the place those disciplines are done throughout the data center.

Gardner: We've discussed some of the issues around expense and the economics around utilization, control, and lower risk with governance and security. We've also addressed the perception, the gap, if you will, on culture and age -- "my grandfather's mainframe" and that sort of thing.

But, there's also this nagging concern in the market around skills and whether the mainframe needs to be sunset because of a lack of support, or whether its going to become, as we just described, the hub for the future. What is it that you bring to your clients in order to ameliorate their concerns around this skills issue?

O'Malley: There are two dimensions to it. One, we have to transform the technology, because we can't be naive. There is an 18-year-old man or woman out there someplace who's about to get into college.

It's very important that we bring a cool factor to the mainframe to make it a platform that's equally compelling to any other. When you do that, you create some interesting dynamics to getting the next generation excited about it.

They're going to have to see a renewed mainframe that is more like what they've been accustomed to, if we're going to have them invest a college career to develop their skills and pursue a career in the mainframe space.

They're used to intuitive interfaces that they don't need a manual for and that they can dig into. They eventually get into the depths of it, but they need a nice entry point into it. They need something that, through just their generalized knowledge, they can get into. A green screen is the opposite of that. It's a heavy-lifting exercise in the front end.

To be very honest, it's very important that we bring a cool factor to the mainframe to make it a platform that's equally compelling to any other. When you do that, you create some interesting dynamics to getting the next generation excited about it. One is that there's a vacuum of talent in that space. So, you've got a career escalator within mainframe that is just not available to you on the distributed side, and we're trying to set the example.

Our first technology within Mainframe 2.0, which I talked about, is called the Mainframe Software Manager. It's effectively InstallShield for the mainframe. We developed that with 20-somethings. In our Prague data center, we recruited 120 students out of school and they developed that in Java on a mainframe.

We're trying to set the example for what you can do in terms of bringing college students, making them effective, and having them do new and creative things on a platform that, at least in the recent history, they hadn't seen a lot of. They can get a sense of confidence between the dynamic of CA redressing the platform and our showing a formula to bring in college students, rapidly make them effective, and have them actually deliver technology that changes the way this platform is managed forever. It changes a lot of people's thinking and gives confidence to our customers and management.

We're also going on the road. I'm speaking at many universities, talking to both existing computer science students, as well as high school students that plan to go to those universities. I'm talking about making the mainframe one that's a friendly platform to them, if you will, and talking about the career opportunities that are offered to them.

Just to give you the sense of amazement, have 25-year-old people in Prague that have written lines of code that, within the next 12 months, we'll be running at the top 1,000 companies on the face of the earth. There aren't a lot of jobs in life that present you that kind of opportunity. But, we've got to get those two dimensions right. We've got to show that the platform is friendly. Its one where we have a formula to bring new college students in, make them effective, and then get the word out there, so that more and more students look at this as a career option for them.

Gardner: I'm just curious. When you speak to high school and college students, are there any particular skill sets that put them into the right track for what they need for mainframes, or is it just mainstream computer science?

A need for urgency

O'Malley: It's mainstream computer science, but there's a need for a level of urgency to get things done. The product that we're coming out within May, Mainframe Software Manager, was written from beginning to end in less than 12 months. One of the things that this project taught us was the capacity of these students to come out and connect with customers. There has been some atrophy in terms of our capacity to communicate, of being able to understand customer needs -- what are the issues -- and then being able to apply new paradigms.

Have no fear. We need almost a level of innocence in looking at things in a far different way that the students can bring and then working very hard in a systematic way in conjunction with a having a transparency with customers to never make a mistake. We can't go down a cul de sac with these kinds of activities -- developing the communication skills, the technical skills, or the discipline to master what I've just described. Those are the big things that we're looking for.

I'll be honest with you. With this younger crowd, there's a lot they don't know, but there is a new dimension that they bring and a level of innovation and creativity that we didn't have without them.

Gardner: They're not intimidated easily, right?

O'Malley: They're not intimidated, and they look at things differently. What others may say can never be done, shouldn't be done, or isn't necessary, they say, "That ain't right." A month later, they're doing something that almost creates a shock and awe from customer. It's a wonderful thing for me to be part of and to witness.

Gardner: Let's look at some examples, if you have any, around how organizations that have heard the cloud model attributes, requirements, and benefits, wanted to get there quickly, and probably had some things in place. Have we examples of taking the mainframe model, elevating it to the cloud model in terms of how it's being utilized, and then perhaps some attributes? Are there metrics of successes as to how that works?

O'Malley: For a long time the higher-end mainframe customers aggressively used their big iron to do things in the way you've described. What's more interesting is that recently we're seeing smaller customers start to look at cloud, more specifically virtualization, being pushed to the mainframe in unconventional ways.

We have an insurance company up in Minneapolis that ran SAP, which is a financial system that competes against Oracle, and they elected initially to run it in client-server fashion. They ran the database server

Some interesting things happen when you bring it up to the mainframe. There's no physical network at that point. It's all hypersockets. So, it has drastically reduced the cost from a networking standpoint.

under DB2 on their z/OS. They ran the application server on an Intel platform. They got to a point where they required an upgrade to that application.

Usually customers follow conventional wisdom. They do what they always did. They upgrade their hardware in place and they leave the application as it was. In this case, this company has a charter to sell insurance only in the state of Minnesota. As a result of that, when Target stores let people go because of the recession, it's not like they can go to Wisconsin and sell somebody else insurance to increase their overall revenue. Cost efficiency, cost per member, is not just an IT issue. It’s a CEO issue.

So, rather than just upgrading this application with all they have, they said, "Let's pause and take a hard look at this environment. Let's look at options and see if there are better things we could be doing to serve the business."

Ultimately, they decided on bringing the application server up to z/Linux, effectively encasing all of SAP in a single server, effectively creating an internal cloud for SAP to handle the scalability requirements and drive down cost.

Some interesting things happen when you bring it up to the mainframe. There's no physical network at that point. It's all hypersockets. So, it has drastically reduced the cost from a networking standpoint.

As you talked about earlier, z/OS effectively becomes a hub to the effort of management. The few people who did system programmer type function on the mainframe could now do it for what is a consolidated distributed environment, where they brought up 40 servers to the mainframe.

The thing that's also interesting is that, because of the maturity of virtualization on the mainframe, you can't just share SAP to 40 SAP servers, but you can also share with Web services and other applications. This is much, much more difficult to do on a distributed side with things like VMware.

Now, they've gotten nearly all their distributed environment up to the mainframe. On that platform, things like disaster recovery, where it was extremely difficult to bring up the environment when they did their testing, now comes up in 90 minutes. In fact, it takes half an hour to bring it up, an hour of certification validation, and they're up and running.

They've seen effectively half the cost, with a greater level of security, resilience, and all the things that the mainframe offers. You saw things like that in the big banks and the big insurance companies that had the capacity and people and smartness skills to do it.

You seldom saw that on the smaller end, but, given the recession and the maturity of the platform, the innovation that's been brought to the mainframe, all the enhancements that have taken place over the last eight years, and the efforts that CA is doing, it's making people look at it differently. That is, I think, a perfect example of a cloud up and running, and making a massive difference to support an organization's charter, which is to serve their customers at the lowest possible cost.

Gardner: I should think that that's not only going to be payback in a short-term but will improve over time as they need to do patches, administration, and upgrades. They'll have a smaller set or perhaps even a singular application set to apply those to to get the benefits of what a SaaS provider can do, but we're now bringing this downstream to a smaller company that can deliver their own on-demand model.

O'Malley: Absolutely. The evil in IT is moving parts and too many of them. The more that you can reduce change and reduce the need to manage change, the more you're going to reduce your overall cost.

The recession eventually will end, and you're right. The people who have taken these steps to drive efficiency, the steps that I just went through, are going to be in a much better competitive position when we come out of this recession not only to grow at a rate that their customers do, but do it in a more cost effective fashion than their competitors.

Gardner: Well, we've covered a lot of territory in terms of understanding some of the issues, the attractiveness of cloud. We've talked about the fact that it's still immature, but that there are a number of elements in the requirements list for cloud that are in place and simply need to be applied. We've discussed some of the issues around age, expense, and skill sets that are being addressed.

I want to thank our guest today, Chris O'Malley. He is the executive vice president and general manager for CA's Mainframe Business Unit. I appreciate your time, Chris.

O'Malley: Dana, thank you very much.

Gardner: We've been learning about how mainframes can help enterprises reach cloud benefits faster, and how in many respects the mainframe is already the cloud. I want to thank the sponsor for this discussion, CA, for their underwriting of its production. This is Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod and Podcast.com. Learn more. Sponsor: CA.

Transcript of a BriefingsDirect podcast on the role and benefits of mainframes and their position as private cloud infrastructure in today's efficiency-minded enterprises. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.

Dana Gardner Interviews Forrester's Frank Gillett on Future of Mission-Critical Cloud Computing

Transcript of a BriefingsDirect podcast with Frank Gillett of Forrester Research on the state of cloud computing and prospects for real-world use in enterprises.

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Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions. Welcome to a special video podcast edition of BriefingsDirect.

Today, we're going to discuss cloud computing in the context of the real-world enterprise. We've certainly heard a lot about the vision for cloud computing and what it can do for the delivery of applications, services, infrastructure, and even development and deployment. What's less clear is how we take the vision and apply it to today's enterprise concerns and requirements.

We're going to look at the need for security, reliability, management,and even integration across multiple instances of cloud services. Here to help us understand the difference between the reality and the vision for cloud computing is Frank Gillett. He is a vice president and principal analyst for general cloud computing topics and issues at Forrester Research. Welcome to the show, Frank.

Frank Gillett: Thanks very much, Dana.

Gardner: You know, the whole notion of cloud computing isn't terribly new. I think it's more of a progression. We certainly had Internet and Web, Web applications, portals, and software-as-a-service (SaaS) applications. Now, taking it a step further, how do you define cloud computing? How can we put a box around this, given the large amount of hype that we've seen?

Gillett: Exactly, Dana. When I talk to folks in the industry, the old timers look at me and say, "Oh, time-sharing!" For some folks this idea, just like virtualization, harkens back to the dawn of the computer industry and things they've seen before. But, when we think about what cloud computing is, there are really two things that are brought to the forefront.

The first is, as you suggest, the rise of the Internet and the notion that instead of having everything on my own computer, or in sort of the database server, I go visit this website over a public network instead of the client-server private network within my company. So, you date it back basically to the dawn of Internet search with the beginning of AltaVista, Yahoo!, and then Google, where we had these applications called "search" that could only be hosted as a service provider.

We didn't think of them as cloud, per se, because cloud was just this funny sketch on a white board that people used to say, "Well, things go into the network, magic happens, and something cool comes from somewhere." Eventually, as you mentioned, those sorts of ideas began to morph into notions of actual SaaS, where I was running a business application as a service from a provider's location.

On a separate track, with the idea of server virtualization -- sharing one server as if it were several -- VMware kicked off this technology for the x86 architecture, in the 1998-1999 timeframe. Of course, the idea originally came from the mainframe, and that technology for machine sharing is sort of the opposite of these giant Web workloads that span machines that have tens or thousands of servers. These two ideas have fused and are now under this umbrella called cloud. I see a wide range of definitions.

The way I work with folks is not to say, "Here is my definition," but rather, "How are you thinking about it," and then categorize it. So broadly speaking, SaaS is a finished service that end users take in. Platform as a service (PaaS) is not for end users, but for developers.

With PaaS, think of a substitute for an application server, and if you think about this, then it's an environment at a service provider. Instead of running your own application server or your own copy of an operating system on site, the developer writes the software and deploys it using the tools from the service provider. He deploys at the service provider and never has to think about operating systems, servers, storage architectures or any of that junk.

Now, some developers want more control at a lower level, right? They do want to get into the operating system. They want to understand the relationship among the different operating systems instances and some of the storage architecture.

At that layer, you're talking about infrastructure as a service (IaaS), where I'm dealing with virtual servers, virtualized storage, and virtual networks. I'm still sharing infrastructure, but at a lower level in the infrastructure. But, I'm still not nailed to this specific hardware the way you are in say a hosting or outsourcing setup.

So, in simple terms, that's how I think about it. SaaS for end users. PaaS for developers who don't want to get into the infrastructure. And, IaaS for developers who want to go that low, or for IT folks who have workloads that they want to bring from the back office and deploy in that environment. That latter one is still secondary, and the whole thing is still emerging. If you were looking at this in Internet time, we're in 1995 or 1996.

Where are we now?

Gardner: We're in the opening innings of cloud computing, but there have been a number of converging trends and even economic incentives that have kicked in to make this top-of-mind for a lot of people now.

What's going on from your research perspective at Forrester? You're looking at adaption patterns. You're looking at mind share. You're looking at economic and technical rationales within enterprises. If we're in the first or second inning in terms of vision, where are we in terms of implementation?

Gillett: Implementation, particularly when you look at it from the point of the view of the enterprise, is pretty early. When we surveyed folks to ask about their use of IaaS, we found two to three percent of enterprises, and about the same for small and medium-sized businesses (SMB), say that they are actually doing some form of pay-per-use hosting of virtual servers at a service provider.

You just can’t throw a cloud-computing phrase at someone and say, “Are you doing it?” Because most of them ask, “Well, what do you mean?” We have to ask specific questions.

We also asked folks about SaaS. When we look at adoption for that, a third of companies are doing some form of SaaS. In both cases,

In cloud stuff, a lot of the noisy early adopters are startups that are very present on the Web, social media, blogs, and stuff like that.

interestingly, the bigger the company the more likely they are to be doing it, despite the hype that the small companies will go first. They tend not to grab the bleeding-edge technology, except for the startups. In cloud stuff, a lot of the noisy early adopters are start-ups that are very present on the Web, social media, blogs, and stuff like that.

A lot of the examples we hear about startups are like Animoto, Good Data, or Allurent who are using this capability to build their own businesses, and they're talking a lot about it. It doesn't necessarily mean that your typical enterprise is doing it, and, if they are, it's probably the developers, and it's probably Web-oriented stuff. So it's a specific subset of what's happening in the enterprise.

Gardner: So, clearly there are some economic incentives for startups that get involved. They don't have to have that upfront capital expense, they can pay as they scale. So, they can create a business model that's commensurate with their costs.

Gillett: That's right.

Gardner: But, for the big payoff from cloud computing, those larger enterprises are at the scale where the cost savings, the efficiency, and the productivity will be the most impactful, what are they doing?

Gillett: When you look at the infrastructure guys who worry about servers and storage, the only place that they may be playing around with this is in testing, development, or workloads where they have to do a bunch of stuff in a hurry and then quit.

One apocryphal example is The New York Times needs to render a hundred years of newspaper articles as PDFs. And, this is an Amazon customer. So, there's the developer scratching his head and saying, "How am I going to find all these servers to render this stuff, and how long is it going to take?"

He starts mucking around with Amazon [Web Services] and figures out that he can move the data up to Amazon, which takes a little while. It was a few terabytes of TIFF files, scanner stuff. Then he's able to write software to take that data once it's at Amazon and convert it to PDFs. He runs the whole thing in 18 hours on few tens or hundreds of instances. Then, he's done, and the whole thing cost him something less than a conventional expense report, a couple of hundred bucks ...

Gardner: Time-share.

Just do it

Gillett: ... Right. Instead of having go out and buy the gear, borrow it, or run it on nights or weekends or whatever, he's just able to go out and do it. That gives you an example of how people are doing it in the infrastructure layer. It's really workloads like test and development, special computation, and things like that, where people are experimenting with it. But, you have to look at your developers, because often it's not the infrastructure guys who are doing this. It's the developers.

It's the people writing code that say, “It takes too long to get infrastructure guys to set up a server, configure the network, apportion the storage, and all that stuff. I'll just go do it over here at the service provider."

My colleague James was talking to an infrastructure guy at a major entertainment company. He says, "Hey, I saw you're using cloud computing." "No, we're not." "Well, take a look at this URL." "I didn't know about this." Click.

Gardner: That raises a very interesting question. Who in the enterprise will be specifying and therefore become responsible for cloud-computing implementations?

Gillett: That question illustrates the challenge of this foggy thing called "cloud." There is no one thing called "cloud," and therefore, there

Who in the enterprise will be specifying and therefore become responsible for cloud-computing implementations?

is no one owner in the enterprise. What we find is that, if you are talking about SaaS, business owners are the ones who are often specing this.

So, a sales person might be looking at, say, Salesforce.com and say, "Hey, I want that." Eventually, they involve the IT folks, but sometimes it's further down the cycle. Sometimes, it's after the fact when they come to IT and say, "We've got this CRM-as-a-service thing, and we need to integrate it with the billing and financials."

What's happening is this whole change in dialog within IT and between IT and it's internal customers, because people at different levels are responsible for different aspects.

There's a different angle on this for security and compliance folks. They're trying to figure out how to make sure -- when anyone can run out with a credit card and buy IT infrastructure -- that they're following all the regs they've got to follow. Whether it's the generic stuff for being a publicly traded company, or basic accounting purposes, or, more importantly, for HIPAA regulations or special financial services regulations, it's quite a challenge, and it's fundamentally a governance challenge.

'One throat to choke'

Gardner: If we have multiple cloud services, multiple levels of cloud in terms of application development infrastructure, we are probably also going to see some implementations internally of the cloud provisioning and the setup for virtualization and lower-cost computing. So, with multiple instances of cloud, some internal and some external, who is the "one throat to choke" if something goes wrong?

Gillett: Bottom line, there isn't one, because there is no one thing. If you look at SaaS, in a handful instances, you might see stuff like that within a large company, but those are mostly from service providers. It's when you get to IaaS, the notion that I can use virtual servers as a shared service, that I can self-provision from a portal, and that are somehow tracked by resource consumption.

That's what we expect to see coming out of IT infrastructure, but that will take longer. If you look at virtualization adoption, only a little more than half of the companies in our surveys report that they are even doing x86 virtualization. So far, of the ones that are virtualized, it's only about a quarter of their operating system instances that are virtualized. That's from a survey late last year.

By the summer of 2010, they're projecting that they will have about half of their operating system instances virtualized, which, from our experience, seems quite aggressive as an average target across these thousand enterprises we surveyed in North America and Europe.

Gardner: Well, Frank, I think enterprises are going to be challenged by this notion they are the place for that "one throat to choke," given that there are so many different spinning plates in this equation across network services, cloud providers, other parts of the business process. What can they go to then, as a third party, to gather the insight to extend their service-level agreements (SLAs) or enforce them?

Gillett: You're right to call on this and ask for the double click down, because they are on their own within the company. They've got to manage the service providers, but there is this thing called the network that's between them and the service providers.

It's not going to be as simple as just going to your network provider, the Internet service provider, and saying, "Make sure my network stays up." This is about understanding and thinking about the performance of the network end to end, the public network, much harder to control than understanding what goes on within the company.

This is where you have to couple looking at your Internet or network service provider with the set of offerings out there for content

It's not going to be as simple as just going to your network provider, the Internet service provider, and saying, "Make sure my network stays up."

and application acceleration. What you're really looking for is comprehensive help in understanding how the Internet works, how to deal with limitations of geography and the physics, the speed of light, making sure that you are distributing the applications correctly over the network -- the ones that you control and architect -- and understanding how to work with the network to interact with various cloud-service providers you're using across the network.

Going to look at the service providers, and the technology offerings for content acceleration, application acceleration, other forms of network resident services can give you a more comprehensive look at the network. Even though you can't get the uber "one throat the choke," at the network layer you can go for a more comprehensive view of the application, and the performance of the network, which is now becoming a critical part of your business process. You depend on these service providers of various stripes scattered across the Internet.

If you take the notion of service-oriented architecture (SOA), and explode it across the public network, now you need sort of the equivalent of the internal network operation center, but you need help from an outside provider, and there's a spectrum of them obviously to do that. When you're asking about governance, the governance of the network is really important to get right and to get help with. There is no way for an individual company to try and manage all that themselves, because they are not in the public network themselves.

Gardner: In the past, I might have been able to exercise governance, security, service levels, liability types of values internally, but this is not going to happen on the Internet. I need to have, in a sense, access to that network?

Access to the network

Gillett: Yes, you need access to the network. People think, "Oh, that means I have to go out and worry about the service providers or the network providers, compliance and all that stuff." No, no, no. It's true, but the really important thing is understanding the comprehensive view of the performance of the network, and getting help from a service provider that has that kind of view. There are a number of parties that have various stories about that.

As your dependence on these different services increases, taking a look at those offerings and understanding how to optimize it is critical. I'll give one tiny example here.

I spoke to a luxury goods and perfume maker that had a public website with transactions, as well as content, on their website. I said, "How many servers does it take to run your transactions?" And they said it only takes four, and that includes the two redundant ones. "Oh, really? That's all?" They said, "Well, not really. Three quarters of my workload is with my application and content acceleration provider. They take care of three quarters of my headache. They make it all work." So, that's a great example.

Gardner: Moving work out onto the network itself.

Gillett: Exactly. In that case, they were not yet dependent on a variety of service providers, but they were really interested in making sure their website worked publicly and externally. They found this provider who was able to do that for them quite effectively, reduced the workload on premises, and gave them the capacity that they needed, stuff at the edge and all that.

Gardner: So the desire is there. The rationale from a technological productivity, that is to say, with more bang for your investment and

There's no such thing as "the" cloud provider, or one cloud provider.

your infrastructure is there. What seems to be missing is this notion of trust, governance, and reliability. If I'm an end-user and something goes wrong, do I call IT, do I call the cloud provider, or do I call the network services provider?

Gillett: Dana, I'll point out one thing, and I'm going to back up to hit one thing that I haven't properly addressed. There's no such thing as "the" cloud provider, or one cloud provider. Part of the complication for IT is, not only do they have multiple parties within the company, which has always been a struggle, as they get into this, they're going to find themselves dealing with multiple providers on the outside.

So, maybe you've got the services still in your IT as an infrastructure. You've got your internal capability. Then, you've got an application, SaaS, and perhaps PaaS, and a business process that somehow stitches all four of those things together. Each one has its own internal complexities and all of it's running over the public network, unless you have got some private thing between these public service providers, which seems unlikely. So, it's really challenging.

Now, to double back, you talked about the economic incentive. One of the misleading ideas here is that cloud is always cheaper. Cloud is not always cheaper. There are different value propositions, reasons you would go to a “cloud service provider.”

One of them is the notion of pay-per-use. I want to pay for what I use. Well, if you want to buy it on a spot market, which is a term that's familiar people who think about buying oil and other commodities, you pay a premium to buy stuff on-demand. You pay more per hour, than if you make an upfront commitment.

SaaS pricing models

If you look at the payment or pricing models for SaaS, you tend to pay per-person per-month. It's crudely matching business value, because you have a user using it during the month. It doesn't truly track to true resource consumption, but you have a semi-predictable bill, which people you've allocated, how many months.

When you pay per use on virtual servers, it looks cheap -- say Amazon's bottom dollar rate of 10 cents an hour. They have other ones, but that's the sort of rock bottom entry one. When you add the cost of running that workload 24/7/365, that can come up more expensive than certainly doing it yourself, particularly if your accounting system doesn't aggregate all the cost together to get you a true cost.

To benchmark to an external service providers, I have to be better at taking care of my own accounting. It's quite hard to compare, because some people who argue they are cheaper will be wrong. They're not thinking as a shareholder, only as the person holding that particular budget within the enterprise.

In other cases, it is truly cheaper than a service provider. I had another service provider come to me and say that they are able to do storage for one-tenth the cost of Amazon's storage cost, because they have optimized for their workload. They understand it and they know how to tune the cost for it.

All these different notions of cloud offer a huge set of trade offs for how fast you can provision what the unit cost is, but people should think of

It's quite hard to compare, because some people who argue they are cheaper will be wrong. They're not thinking as a shareholder, only as the person holding that particular budget within the enterprise.

it as a spectrum of things. You're not always getting something that's cheaper. Sometimes it's more effective for the business, but not necessarily cheaper on a unit-cost basis.

Gardner: So, as we look at the economics, we also have to factor in the notion that people can do a lot more or do it differently with a cloud model environment than they could have done internally. This is how we can, in a sense, integrate across different sets of services from different providers that can specialize, but put them in the context of a business process.

So, we have modules, if you will, of cloud services. This is, I think, the pay-off that people are also looking for. How do you describe not just the economic benefits, but these abilities to do things that could not have been done before in a single data center, where applications are monolithically supported?

Gillett: We have been talking for a long time about ideas like this. Early on, we talked about shared and automated infrastructure at Forrester, early in 2002. We followed that up with a report on what we called "Organic Business" that really talked about this notion of different companies being able to work together in flexible and fluid ways, and really being able to do new ways of business innovation.

If you look at it, a lot of these concepts are embodied in the whole set of ideas around SOA, that everything is manifested as services, and it's all loosely coupled, and they can work together. Well, that works great, as long as you've got good governance over those different services, and you've got the right sort of security on them, the authentication and permissions, and you found the right balance of designing for reuse, versus efficiently getting things done.

SOA is actually a dirty word actually for some of the more Web- or Internet- oriented folks, but for the enterprise folks, some of the cloud ideas are just a broadening and extension of SOA and the notion of, "Now, I can pull some of my services from outside."

Look at a company like Avalara, a tax calculation service. Why should I do my own tax calculations or buy an on-premises suite of software and constantly have to update it? Why don't I just go to a service provider and send them the informations about the transaction, have them return to me the correct tax payment and the entities to send it to? Then, I can pay for the tax calculation per order, and I'm all done. I don't have to worry about any of that stuff.

What if?

But, as you're hinting at, I have to think about how I make that business process work, making sure that I work over the Internet? What do I do if that service provider hiccups or a backhoe cuts a fiber optic cable between me and the service provider?

Now, I'm becoming more dependent on the public Internet infrastructure, once I'm tying into these service providers and tying into multiple parties. Like a lot of things in technology, unless you're going to completely turn over everything to an outside service provider, which sounds like traditional outsourcing to me, the "one throat to choke" is your own.

You'd have to figure this stuff out, and you can get help to simplify it, so you have only a handful of people to bang heads together. If you think about it, it's not that different than when I ran all the infrastructure on my own premises, because I had gear and applications from different parties, and, at the end of day, it was up to me to referee these folks and get them to work together.

Gardner: So, your perspective that SOA sets the stage and that cloud computing is a larger abstraction and a use case, if you will, for SOA. That makes a lot of sense. We have some precedents, though, for how this might work. We have SaaS, which has become quite popular in recent years around certain applications -- sales force automation, resource management in the enterprise, human capital management (HCM), and so forth.

We have a track record of organizations saying, "Listen, I don't want to be in the commodity applications business. I want to specialize in what's going to differentiate me as an enterprise. I don't want to have everyone recreating the same application instance. We want to get reuse. We want to get efficiency of scale," and so forth. What's been the ability of managing and governing SaaS up to this point?

Gillett: That's still getting worked out. One of the problems with SaaS, particularly as you get into multiple packages, is how I get those

You'd have to figure this stuff out, and you can get help to simplify it, so you have only a handful of people to bang heads together.

different entities to work together. And one of the answers, of course, is don't work with multiple parties. Go to one party and work with their expanding pool of SaaS, but most companies won't have the luxury of choosing that.

Then you're into integration, and that's one of the struggles we see folks having with SaaS today -- working out how to do that integration. Do they have the direct connect between the providers? Do they route it through their own internal capabilities? How do they monitor that and make sure that it's working effectively?

So, we have some lessons from the experience of SaaS, even though that aspect of the thing that some call cloud is further along the track. Some people insist that SaaS isn't part of cloud. I'm not going to have that fight.

Even though they are the most along, they have a lot to figure out. So I look at this, and I say, "Okay, we've got a decade here to sort this out." It's a completely different problem, by the way, to think about how I take the existing applications I run inside my company, and think about migrating them to a service provider.

I want to pause here and double down on something you said which is, "Cloud is about commoditizing IT, and only things that aren't differentiating leave my company." Not true.

Cloud and mission-critical apps

Cloud services can handle mission-critical workloads, things that differentiate you. In fact, that might only be possible if you do them in a service provider, and with the commodity stuff. In fact, part of the point here is to get folks to really think about what are their needs, what are the offerings in the marketplace, and what's best for the company or the shareholders about taking advantage of that mix of internal capabilities and third-party.

Let me give you an example. Let's say that your business has critical calculations to run overnight, say, for ad placement on websites. Let's say that that's soaks up huge amounts of computing capacity when you run the workload at night, but sits idle during the day.

Gardner: A batch process?

Gillett: Yeah, and a batch process that doesn't saturate the server. If I provision for peak, say Christmas, I have this huge amount of capacity sitting around idle the rest of the year.

Gardner: A very costly system?

Gillett: Guess what? That's one of the workloads that runs at Amazon's EC2 IaaS or computer as a service.

Gardner: Mission critical or not?

Gillett: Correct. In that case, it's more cost effective and more flexible for them to run it with the service provider, even though it's mission critical. It's a more effective use of resources.

Now, let's flip it around the other way. Take a provider that does streaming of public websites of media. You go to a website of a major newspaper or a television network and you want to see their video. This provider helps with that on the back-end. What they found, when they looked at their internal infrastructure, was that they felt they were cheaper than the Amazon at running their core infrastructure.

Amazon looked like a nice extra capacity on top, so they wouldn't have to buy over provision as much. Amazon also looked like a great way to add capacity into new regions before they got critical mass to do it cost effectively themselves in that region. There are two examples of the non-intuitive ways to think about this.

Gardner: Right, mission critical, and being able to handle success, which should come -- even unexpectedly. What we need then to get to

In that case, it's more cost effective and more flexible for them to run it with the service provider, even though it's mission critical. It's a more effective use of resources.

that benefit seems to come back to governance time and again. We had governance issues internally, especially when we moved to SOA. We have to manage integration issues, reliability, compliance, and different applications of regulations within industries.

That gets to a higher level of complexity when we move to cloud. What's going to be governance as a service? How are we going to get between these cloud providers and the enterprise to manage this complexity?

Gillett: It's so early that it's hard to see what the solution is going to be. The closest I have seen that begins to hint at anything, and I don't even think of this as a sort of, a very much of the step down the road.

There's a provider in Europe called Zimory, another startup, that's trying to serve as a brokerage through raw computers as a service. If you want to know where the cheapest stuff is, you want to follow the sun, or move your workload around to follow the cheap stuff, that's an example of what Zimory is trying to do.

That's not quite governance, but there is an element of that in there. Fundamentally, what you were hinting at in your questions, Dana, is IT was already struggling with notions of internally shared infrastructure, things like blade servers and server virtualization that required the different stovepipes and IT ops to talk to each other and work together.

There's also this big chasm between developers and ops in terms of “throw it over the wall deployment,” and now we are just going to explode that out across the open Internet to the service providers that people are tying into.

Cloud hype bubble

It feels like we are in a cloud hype bubble right now. All the hype and noise is sort of on the upswing still, but we are going to see this subside and calm down late this year or next year. This is not to say that the ideas aren't good. It's just that it will take a significant amount of time to sort things out, figure out the right choices for the offerings to mature, for the early adopters to get in, the mainstream folks, and the laggards. It's only as we get deeper into it that we even begin to understand the governance ideas.

So your questions are spot on, but early, because right now people are still dealing with SaaS and just beginning to figure out how to take advantage of computers as a service. I'm speaking from the point of view of the enterprise. I have a few developers dabbling in PaaS, and people are figuring out what to do.

All of this, as I suggest, it is going to force IT to rethink what its value proposition is and how it does it. It's going to be interesting to see whether they can do it themselves, or whether the service provider steps up and does richer, more complex complete offerings. That will take some time, and we'll see new fangled forms of outsourcing, if you will, that are more “cloud oriented.” I don't know what that would look like either, because that's not easy.

Gardner: As we discussed in the beginning, the movement to cloud is a progression. We started with the Internet and the Web moving into applications and portals. We had to peel the onion then. We keep hitting more layers. We came up with optimization and wide area network, acceleration technologies, distributing different aspects of the Web application to the edge, the data, the graphics, and so forth. Those same sorts of technologies and solutions pertain to the cloud.

Gillett: Absolutely. If you think about it, what this fundamentally means is that developers will have to rethink how they write applications architecturally and think about where they're trying to deliver the business experience to. That means thinking about the network end to end, and thinking globally, if you're a company that has to worry about global reach. Then that means, ultimately thinking about architecturally where things belong in the network.

Static content doesn't change much. You want that out as close as possible to the user to reduce latency and the uncertainty about long-haul transit. Furthermore, from the point of view of all the combined entities providing backbone Internet, you need to decide whether you want to keep chewing up long-haul pipe to move the same video or content transcontinental, when for a low cost, you could stick it locally.

Gardner: That becomes more the case when you have multiple enterprises accessing the same set of core application.

Gillett: Absolutely. Remember, this isn't just enterprises. It might be enterprises trying to reach millions of consumers.

You start thinking about how to distribute application logic, to create fast response, good business service levels and things like that

That's one example of the static content. Think about dynamic content. Think about the fact that if I'm selling something like concert tickets or airline seats, there are a limited number of them. I can sell the first batch of them at the edge without having to go back to the core database, as long as I'm not selling a specific seat.

It's a little tricky here, but if you're selling a thousand widgets, you can cache at the edge the application logic that says, "Sell the first 800 from the edge, and then flip a switch and then we'll back haul to sell the last 200, so we don't oversell."

You start thinking about how to distribute application logic, to create fast response, good business service levels and things like that, despite the fact that you think, "We're just selling one thing and all that has to come back to a central database." Not necessarily. So, you really start to think about that. You think about how to prioritize things across the network. This is more important than that. All of it is basically fighting the laws of physics, also trying to figure out the speed of light, and all sorts of computation stuff.

Most cost-effective way

It's also trying to figure out the most cost-effective way to do it. Part of what we're seeing is the development and progression of an industry that's trying to figure out how to most cost-effectively deliver something. Over time we'll see changes in the financial structures of the various service providers, Internet, software or whatever, as they try to find the right way to most cost-efficiently deliver these capabilities.

Gardner: So, we need to rethink governance into an abstraction of cloud. We'd also need to rethink the architecture of the application from its inception and in the use cases that are more likely in a cloud environment.

Gillett: That's right. Let's not scare anybody by saying, "I can't do anything until I do all that stuff." We're trying to describe the journey that they're going on.

If you could sit down and write an application today from an enterprise that's Web facing, take a look at the conceptual architecture of what you're doing, and think about what capabilities belong where. Is there some stuff that would be better off at a service provider, not just for cost reasons, but for performance reasons? What kind of service provider?

I look at applications and content acceleration service offerings, I look at hosting of Web apps, and then I look at computer as a service, and to me it look like they're blurring a little bit. Amazon is out there offering a content-delivery network. The hosters are partnering with folks who do app acceleration or content delivery. I'm looking at the app delivery and content acceleration guys, and asking, "When are they going to help me with the hosting? They've already got three quarters of my workload?"

It's a very interesting time to create new applications. I want to reinforce the point you were hinting at, which is, it's one thing to take an existing workload and figure out what the best thing to do with it is across this increasing spectrum of choices.

It's another thing to start at the beginning, as you begin to architect the application and say, "What kinds of abstractions or modular architectures are loosely coupled to purchase, could I improve the performance of this application in the long run, or increase my options down the road for taking advantage of service providers.

If you have the luxury of a blank sheet of paper, there are some interesting possibilities to think about, but we're really early. So, don't get too hung up on sharpening your pencil and trying to figure it out. Just make the best set of choices you can make right now and keep running.

Gardner: We're just about out of time, but for those organizations that have this spectrum of options, that like what they see somewhat out in the future, how do they get started? How they put themselves in position to take advantage of it, sooner rather than later and perhaps gain a competitive advantage as a result?

Gillett: A lot depends on where you sit within the organization. For folks who are responsible for end-user applications or who purchase them, it's making sure that SaaS options are in the mix, and not just the

A lot depends on where you sit within the organization.

end-user applications, things like an Avalara tax service. They're a modular plug-in to your overall application architecture. I dubbed this one point "components as a service," because it's really end-user facing, but it feeds that.

For developers, there are two sets of choices. Look at PaaS. Are there reasons to think about Microsoft Azure or a Google App Engine as a place to execute your code? And, there are others -- Salesforce.com and LongJump -- but sometimes it involves development tools over the Web, rather than your local tools -- quite a diverse spectrum of things.

The other developer options are that you don't want to deploy to, in effect, an app, server as a service. You want the infrastructure. Then, look at IaaS. Then, you're looking at Rackspace's offerings under the Mosso business unit. I can't remember their new name, but Slicehost was somebody they acquired. You have ServePath's GoGrid offering. You have Amazon EC2, where you go and say, "Hey. I set up a bunch of virtual servers. Here is the VLAN to connect them." It's like working with raw infrastructure, except virtual.

Then, yet another role within IT is the IT infrastructure operations person. If you needs some more compute capacity for the test and dev guys, for that odd batch job, or temporary thing, or maybe you have some workloads that you think steady state -- that run 24/7/365 -- you want them at a service provider. Then, you also go look at the computer-as-a-service offerings.

Interestingly, there is a different set of offerings, if you're thinking about running conventional back-office apps, versus the Web stuff. Then, you're looking more at Rackspace and Mosso, and you're looking at SAVVIS. You want servers that, when you pile up a lot of virtual servers on one box, you get a nice mission-critical enterprise underneath it, trying to catch it, versus Web app servers that funky developers are playing with. They're running tens of thousands of instances. They want the cheapest boxes that they can find, and so they're two different value propositions.

Gardner: So, the common theme here, it sounds like, is to experiment, try a bunch of different things, but keep in mind that if one of those experiments works, you're going to want to transition that into a mission-critical, enterprise-caliber service.

Gillett: Yeah, and I want to come back to something you were saying, which is, it is about governance? One of the things that we're telling our infrastructure and operations guys is to get in early ahead of the developers.

Don't let them run willy-nilly and pick a bunch of services. Work with the enterprise architect, the IT architect, to identify some services that fit your security and compliance requirements. Then, tell the developers, "Okay. Here is the approved ones that you can go play with, and here's how we're going to integrate them."

So, proactively, get out in front of these people experimenting with their credit cards, even if it's uncomfortable for you. Get in early on the governance. Don't let that one run away from you.

Gardner: Well, great. We're taking a look at cloud computing through the lens of vision versus reality. Clearly, there's an awful lot happening, and I think that will continue for some time.

This is Dana Gardner, principal analyst at Interarbor Solutions. You've been enjoying a special video podcast production of BriefingsDirect. We've been joined by Frank Gillett, vice president and principal analyst at Forrester Research. Thank you, Frank.

Gillett: Thank you, Dana.

Gardner: Thanks again for listening, and come back next time.

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Transcript of a BriefingsDirect video podcast with Frank Gillett of Forrester Research on the state of cloud computing and prospects for the future. Copyright Interarbor Solutions, LLC, 2005-2000. All rights reserved.

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Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 41 on the current state of information technology and defining the best description of the next era of computing.

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Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Volume 41. I'm your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions.

This periodic discussion and dissection of IT infrastructure related news and events, with a panel of industry analysts and guests, comes to you with the help of our charter sponsor, Active Endpoints, maker of the ActiveVOS visual orchestration system, and also through the support of TIBCO Software.

Our topic this week on BriefingsDirect Analyst Insights Edition, and it is the week of April 27, 2009, centers on the next era of information technology (IT). We seem to be in it but we don't have a name for it yet.

Suddenly, cloud computing is the dominant buzzword of the day, but the current confluence of trends includes much more. There is business process modeling (BPM), business intelligence (BI), complex event processing (CEP), service-oriented architecture (SOA), software as a service (SaaS), Web-oriented architecture (WOA), and even Enterprise 2.0.

How do all of these relate? Or if they don't relate, is there a common theme? Is there an overriding über direction for IT that we need to consider?

For me, the cloud computing moniker just doesn't include enough and doesn't bring us to the next stage. In the words of Huey Lewis, we need a "new drug." So what is the next über IT phase for next generation enterprise technology?

Here to help us understand what the new IT drug is, join me in welcoming our analysts panel this week. We are joined by Jim Kobielus, senior analyst at Forrester Research. Hey, Jim?

Jim Kobielus: Hey, Dana. Hi, everybody.

Gardner: Brad Shimmin, senior analyst, Current Analysis.

Brad Shimmin: Greetings, Dana.

Gardner: Joe McKendrick, independent analyst and prolific blogger. Welcome back, Joe.

Joe McKendrick: Hi, Dana, glad to be back.

Gardner: We also welcome Ron Schmelzer, senior analyst at ZapThink. Hey, Ron.

Ron Schmelzer: Hey, there. Glad to be here. Thanks for having me on your drug trip.

Gardner: And we also might be joined in a little while by Tony Baer, senior analyst at Ovum.

But let's start out with our über definition. Jim Kobielus, do you agree with me that we're oversimplifying what's going on in IT by just calling everything that's going on cloud computing?

Kobielus: Of course, we're oversimplifying, but that's what we, as analysts, need to do now and then. There is just too much stuff, too much complexity, too many themes, and too many paths for evolution and innovation.

I agree with you, Dana, we all get worn out by these themes, trying to jam too much into them. Half the time I'm thinking we need to move to a post-theme era in IT and have a themeless architecture.

Half the time, with all these themes, I feel like I'm in Disneyland. I'm walking in Adventureland, Tomorrowland, Fantasyland, and, after a while, I sort of lose sight of the overall big park through which I'm roaming. I want an über Walt Disney to stand above it and say, "Here is my vision for the great magical journey we're on."

I don't think that Great Uncle Walt will emerge from the sky, but I do think we need to ask ourselves what value these themes add. These are all valuable frameworks -- SOA, cloud, virtualization, Enterprise 2.0, SaaS, and so forth, but they're valid and valuable for particular uses and for particular ways of approaching and managing the technology. None of them is superfluous, but none of them will become the über theme for everything we might ever want to do with technology.

Gardner: Well, Brad Shimmin, it seems though that something has shifted in the last six months. Perhaps, it's because of the recession, the contracting economy, but it certainly feels different than it did six months ago. Do you agree?

Shimmin: It does. Even in the last few weeks, now that we have the Swine Flu economy upon us. It seems that so many of us are in the midst of knee-jerk reactions to things within the industry and within our little sphere that we live on, but something more profound has changed over the last couple of years.

Going back to what Jim was talking about, it's so hard to put a finger on it and describe it. It's almost like the art scene at the turn of the century. They really didn't know what the hell to call what people were making. So, they just said, "Oh, it's postmodern." So, the postmodern IT world is perhaps what we're living in. Maybe that's okay, where there is no really overriding sort of thematic vision to IT, but I'm an analyst so I always try to like put labels on things.

My attempt with this is to describe just the zeitgeist I've seen over the last year or so, and that is just to call things -- with a double entendre totally intended here, and it's not sexual by the way or drug related -- "transparent computing." That's is what I'd look at this as.

The double part of this is IT resources and business solutions are becoming more visible to us. We're able to better measure them. We're able to better assess their cost-to-value ratio. At the same time, the physicality of those resources and the things that we call a business are becoming much more transparent to us and much more ethereal, in terms of being sucked into Amazon EC2, for example.

Gardner: What's transparent now that wasn't before?

APIs and transparency

Shimmin: For one, application programming interfaces (APIs) have made things much more transparent than they were. We all had a great discussion a little while back about WOA. That's a great example of what that means. As an enterprise owner or an independent software vendor (ISV) creating software, you have the ability to see into software with much more active and quicker response time than you could back in the days of SQL or an API in a 400-page book that you had to memorize.

Gardner: Is that a function of open source or just that Web services need to be fully understood in order to be shared and have interoperability work?

Shimmin: Open source to me is really the cultural vision of what you're talking about. Technologically, it really was what SOA engendered in its approach with opening up a layer of abstraction. So, it's like open-source sociology, SOA technology.

Gardner: What do you think, Joe McKendrick, is it the "open the kimono" technology era?

McKendrick: I think so. I don't think there's a name we can give it. Perhaps computing has become so ubiquitous to our everyday lives and our everyday work that it no longer needs to carry a name. We don't call this era the "telephone era" or the "television era." For that matter, we don't call it the "space age" anymore. The novelty and the newness of all this is worn off.

Looking back over at the past six months or even five or six years, a big thing that's been happening is that business users really understand computing. Computing is such an everyday thing that folks understand. At the same time, the IT folks are beginning to understand the business a little bit better and we're seeing those two worlds being brought together and blending.

Gardner: This is a George Costanza moment: worlds are colliding.

McKendrick: Worlds are colliding.

Kobielus: Dana, I just noticed something. This decade that we're currently ending has no name. Last decade it was the '90s, the one before that was the '80s, we've never given this decade a real name that's stuck chronologically. Likewise, this era that we are now entering doesn't have a name and maybe it shouldn't have a name, it's the "double-0 era."

Gardner: You're right, we don't have a name. Ron Schmelzer, do you think we need a name for this? It seems that now we're talking about a post-IT era, because IT is so pervasive that we don't even need to break it out anymore, that its just part of everything?

Schmelzer: We could say that we're still floating through the information era, but I like what Jim was talking about, the floating from one theme park to the other theme park in Disneyland, as we've been doing here in IT, to a certain extent.

I'm going to bring back the drug theme here. I might as well. We like to self-medicate in IT. We have these chronic problems that we seem to be continuously trying to solve. They're the same problems: getting systems to talk to each other, to extract information, and to make it all work. We try one drug after the other and they provide these short-term fixes. Then, there's the inevitable crash afterward, and we just never seem to solve the underlying problem.

If we had to get back to that Disney theme, there actually was one that tied them all together. What was the theme at Disneyland? "It's a small world after all." Isn't it? I like to bring it all back to IT. All these things we do, they're all looking very similar. Tying in the recent presidential campaign, maybe we are the change we are looking for. So maybe it's not really about the technology. Maybe it's the way that we're sitting here using the stuff, and it's more a change to process than it is to technology.

Kobielus: And, taking that theme just a little further, it's amazing what you can do with a mouse.

Psychological shift

Gardner: Well, in an era when we're always on, where there is ubiquity of at least network reach, now we all have smartphones and we can sync the phone to our PCs and into the cloud. We're all carrying our same configuration, private and public, as well as personal and work, all around with us. We never seem to break free of our IT identities. Our IT identity, our personal identity, and our work identity are the same.

Is this really a psychological shift then? Do we need to stop thinking about how technology is shifting and think about how people are shifting? I think that people are acting differently than they used to.

Schmelzer: I found out one thing though. From our personal life, our IT experience is becoming very rich. It's not just the Web and the phone experience or the television experience. Everything, the whole IT experience, is becoming remarkable. But, there is a digital divide, and I'm not talking about the parts of the country that have more IT than the other. I'm talking about the experience at home and the experience at work.

When I step into work, I'm turning the clock back 10 years. I have this wonderful, rich IT environment on my own at home and on my phone. Then, I see these enterprise IT systems that had very little in the way of influence from any of these movements from the last 10 years. It's like the enterprise IT environment is starting to stagnate quite a bit from the personal IT environment.

McKendrick: You aren't talking about the ZapThink workplace, are you?

Schmelzer: I work at home, so I've got the best of both worlds,

But, there is a digital divide, and I'm not talking about the parts of the country that have more IT than the other. I'm talking about the experience at home and the experience at work.

but I'm talking about walking into some of customer environments.

McKendrick: Some companies have stepped back 20-30 years in time.

Gardner: Hold on that thought. Ron, it sounds to me like a generation gap. We're back to 1972. Our dads are still locked into the World War II generation, and we're already well into the "Me Generation." Is that what's going on in technology now between business and consumer technologies?

Schmelzer: Yeah. Look at the IT environment. The question is, if we had to do it all over again, would we really be building enterprise IT systems or would we be doing it the way Google is doing it? Google would just be laughing at us and saying, "What are you doing putting in these mainframes and these large enterprise applications that take X millions of dollars and multiple years and you only achieve 10 percent of your goals and only use 5 percent of the system you just built? That's just hilarious."

Gardner: Jim Kobielus, is this whole cloud thing, in fact, forcing businesses and enterprise to catch up with what's been going on in the consumer circles?

Kobielus: Is the cloud phenomenon causing businesses to catch up with what's going on the consumer circles? Can you give me an example, Dana, so I know where you're coming from with that one?

Gardner: It's sort of playing off of what Ron was talking about. If I go to Gmail, I can get a free account. Suddenly, I can do chat and coordinate with my mobile phone. Google knows my identity a little bit and offers me the ability to do word processing, and on top of that I can do better searches. Then, in addition to that, I've got my own profile now at the bottom, when people search on my name. Now, I have an AdWords account. I can coordinate and integrate into cloud, but I can't in my own business.

Highly empowered

Kobielus: Exactly. Most of us, as Ron indicated, in our personal lives are highly empowered now with all sorts of media, gadgets, and services that it's just amazing what we have already integrated into our "life" lives.

When we go out to the workplace, assuming that we work somewhere other than our home and we're not self-employed, we see what our employer provides for us. What the employer provides may be technology, services, or capabilities that are 10 years behind the times.

We get frustrated. We think, first of all, "I'm spending eight or more hours of my day here with less capability, less connectivity, and less ability to be productive than if I simply stayed at home. Well, why don't I simply telecommute? More to the point, why don't I move to another company that provides me with better tools that are up-to-date, up to 2009?"

What you're hitting on is that there is this disconnect between what we can get on our own for ourselves and what our employer provisions for us. That causes frustration. That causes us to want to bolt, defect from an employer who doesn't empower us up to the level that we absolutely demand and expect.

Who has the highest expectations? It's the younger generation. It's my kids' generation, who are in college. When they go out to the working world,

What you're hitting on is that there is this disconnect between what we can get on our own for ourselves and what our employer provisions for us. That causes frustration.

they're going to think, "Oh, look at this. I'm not going to work for these people whose heads are stuck in the '70s or '80s."

Gardner: I don't know about the young people thing. I think the gap isn't really based on age. I think it's a gap based on people who see IT as empowering versus those that see IT as debilitating.

I was at the ballet last night in Boston, and during intermission, between some great dancing, people were breaking out their smartphones, and these weren't young people. Here's a whole group of folks that you really wouldn't have expected to be doing that. Brad Shimmin, what's going on?

Shimmin: I've got a great example of that from a vendor. I don't think I can name them, because they haven't made it live yet, but this is representative of what I'm seeing in my area of research, which is in collaboration, social computing, that stuff.

Most of the vendors have got the traditional, on-premise software, and they're all putting it in the cloud. They're also saying to me, in their go-to market schemes, "We're trying to take IT out of the picture, at least at the outset." They're seeing IT as a roadblock to getting these technologies -- like the ones you're talking about with Google Apps -- into the enterprise.

The people in the enterprise realize they want it. The worker bees in IT realize it, but IT's hands are strapped. They can't do anything about it, like Jim said. So, these companies are literally working around IT in some ways to bring these technologies into the enterprise.

Half empty - half full

Gardner: I'd like to get more into this psychology of what makes people rabid IT consumers versus somebody who avoids it. I think it has to do with the glass being either half empty or half full. Some people see IT as actually benefiting them across the board -- personal lives, communications, applications and services.

You go into a lot of cities now and there are people driving Zipcars, ordering groceries over the Internet, and finding their directions on their iPhones or a smartphone. It's really embedded deeply into their lives. There are other people who just don't see IT as helping them, but it actually frustrates or inhibits them.

Does anybody else have some thoughts as to whether we're crossing a cultural gap here or a threshold? Should we call it the "age of always on or always off," and how do we decide who gets to do what?

McKendrick: Dana, even those folks who think they're avoiding IT, actually do deal with it. Anytime they go to an ATM, they're using the client, the front-end of a network of an IT system. If they go to a phone and use voicemail or a voice prompt, they're accessing an IT system. It's unavoidable now.

I'm going to bring up Google up here. Even 10 or 20 years ago in any science fiction movie, nobody could have imagined that we'd have a resource where we could ask any question and get an answer back from any point in the globe. Nobody ever thought that, that would be possible.

Gardner: It really strikes me that between Wikipedia and Google, I can find just about anything I want, and I do. It's very enriching.

McKendrick: Anything, all the information in the world, everything is

Even 10 or 20 years ago in any science fiction movie, nobody could have imagined that we'd have a resource where we could ask any question and get an answer back from any point in the globe. Nobody ever thought that, that would be possible.

available.

Shimmin: Excuse me guys. With Wolfram Alpha, if any of you have heard of that, that's coming out, it's going to be not just content, but also the data itself. You can get answers to questions like, "What's the statistical probability that I'm going to get in a car accident next year?" It's amazing. For me, it's not so much even a cultural shift or a threshold. It's a functional threshold.

Back to just talking about Google and how pervasive it is, and the ATM example. If you're a two-year old baby and you're picking up an iPhone -- which I think I saw on YouTube at some point -- and you're able to actually make the damn thing work, that says to me that we've crossed the functional threshold. We have the technology in a form factor that people can understand and make use of, without it being a barrier to their adoption, regardless of age or any of those other factors.

Schmelzer: This wonderful idea of technology and technologists and IT and stuff -- we've been trying to figure out what is the real issue with business and IT. Is it just that there are people who don't like technology and people who do? It's more than just a cultural thing? It's personal preference. What we found is that most people, if not almost everybody, actually loved technology. So it's not an anti-technology thing.

You ask people, "Well, do you want a 42-inch plasma television in your house? Do you want TiVo? Do you want the latest MacBook and the latest iPhone?" Something like 90 percent of the people are going to say yes. They want the GPS. They want all that stuff.

So what is it about enterprise IT? It's not the technology that they're blocking. It's this complexity. And it's not just the complexity. It's this perception that enterprise IT is nonconstructive hassle. So they look at Google and they think, "Ah, constructive, productive." They look at enterprise IT, and they think, "Barrier, bottleneck."

Shimmin: You're absolutely right. Any of us here -- because most of us work remotely -- who has to get on a VPN before we're allowed access into the corporate facilities that we connect with knows that hassle and knows just what you're talking about.

Resisting bottlenecks

Kobielus: We on this call are atypical, because we're highly autonomous analysts who are quite used to self-provisioning. We're either running our own business or, if we 're employed by a larger company, have a remote, completely self-contained office where we basically have to do everything.

We're chief cook and bottle washer and we fix our own systems issues. We resist these IT bottlenecks, because bottlenecks just keep us from continuing to self-service and self-provision, as we've always preferred to do and as we want to keep on doing.

Really, this is an age of self-service, mashups, fending for ourselves, and resisting bottlenecks, or organizations, such as corporate IT, that essentially are bottlenecks, keeping us from getting the resources and services that we need right now.

Gardner: We're also in the era of mass bankruptcies, with Chrysler now declaring bankruptcy. We're looking at large banks, some of which may have not passed the stress test. We're looking at, in some senses, an implosion of a financial order, at least on Wall Street.

Is there any connection? Is there any connection between a big car company that can't seem to change itself over a 30-year period and individuals, enabled with technology

We have a corporation gap. The corporations have a huge burden of trying to move and do anything, whereas individuals or small companies or people that are aligned by their social network can move swiftly.

as it is today, can change their career, change their direction, and get virtually any information instantly.

Is there something going on here between the fact that a big company can't shift and move and change, but individuals can? Any comments?

McKendrick: A few months ago, when it first became apparent that GM and Chrysler were on the skids, Andrew McAfee of Harvard posted this proposal to help these companies. If he were given the option to rebuild one of these companies from the ground-up, he would go in with a very strong social networking system, enabling the folks that are working on the front lines, assembly, production, sales, marketing, and so forth to communicate with each other real time, on a regular basis, to find out what everybody is doing, and to build the base of knowledge to move the company forward.

Gardner: So, we don't have a generation gap. We have a corporation gap. The corporations have a huge burden of trying to move and do anything, whereas individuals or small companies or people that are aligned by their social networks can move swiftly. Perhaps we need to destroy the dinosaurs and become small furry mammals in the undergrowth. Is that it?

Kobielus: Yeah, take the auto analogy. I'm from Detroit originally and I know that culture. Auto companies of necessity are chained to platforms. It's the basic chassis and design and the internal guts in terms of the transmission and engines and so forth for a wide range of models. When they make a commitment to a given platform, they're stuck with it. They put up millions upon millions of dollars.

Gardner: Well, the same can be said for your enterprise IT department, right?

Chained to a platform

Kobielus: Exactly. Being chained to a fixed and fairly static platform, there are great scale economies. That's how the GMs got to be GMs, but it really limits your ability to turn on a dime. In other words, when some hotshot auto company from -- let's just name a country we don't even think has an auto industry -- Zimbabwe comes along and gives the customer something that they like more, they just build fairly quickly and get out to market.

I don't know of any Zimbabwean automaker, but regardless, if you think about corporate IT, they're chained to these huge platforms that they've made a significant investment in. So, when some cheaper, more lightweight solution, maybe in the cloud, comes along, the users can get it quickly and more cheaply. It's essentially mocking the investments that this company has made. You spent millions of dollars on something that you could have gotten in the cloud for pennies per hour. That's a disruptive force in IT.

Gardner: Let's hold that thought. I think Tony Baer just joined us. Is that right?

Tony Baer: Yeah, I'm here.

Gardner: Welcome to the show, Tony. We've been talking about needing a new drug in IT. I think we've stumbled into something interesting. Individuals in their lives, corporations, governments, maybe even entire industries, some of which are encumbered by technology or held back if it's a "platform-based technology," can't move with the times.

Other organizations, individuals, or networks of people embracing what we now are calling loosely "cloud computing" are able to be fleet agile, move on a dime, change their business, and not be encumbered by their own data centers or their own platforms. There seems to be a gulf between the two.

One group is able to be productive and perhaps redefine business and even culture and society relationships. The other is suffering terribly with massive layoffs, restructuring, mergers and acquisitions, in a sense a meltdown, even bankruptcies at a scale never expected.

How do you see it, Tony? Is the gap here between technologies? Is it between platforms? How can we reconcile these two?

Baer: Well, there are a couple of things. There is always the advantage of the late starter, and there is always a disadvantage of the first starter. One of the things that came to my mind this week is the imminent demise of Cassatt, which was onto the idea of private clouds before its time.

On the other hand, if you're a late starter and the technology or the market has already proven itself, you can then start to innovate with the latest methodologies or technologies, whatever, without being burdened by all the baggage.

Gardner: Are we talking about more than just the innovator's dilemma here? Aren't we really moving into a new era, because everyone is always an innovator, if you look at the cloud model?

In a new era

Baer: Right. I'm coming a little bit out of context here, but I do think that we're into a new era, where you need to shave your cost structure and all your baggage that keeps you stuck in one place.

On the other hand, what I was about to lead up to is that you can start nice and fast, but then as you start to get into the scale up and scale out, in other words, when you start to become a victim of your own success, there are some lessons that some veterans have learned. Veterans who haven't been bogged down by legacy infrastructure learn that if you've just come into this race, you might think this doesn't apply to you, but it does.

So, on one hand, yes, I do think we are at a point where there are some basic structural changes that are happening, but at the same time, the old rule still applies. Once you get to a certain scale, you need to know how to manage it, whether it be technology, people, communications, process, or whatever.

Gardner: Brad Shimmin, let's take this back to the IT department and the large enterprise. They might be seeing this going on. They might have an inkling. But, they know that they can't do much with their existing culture and their existing organization. Isn't it time for a skunkworks or some sort of a parallel IT department, even if it's not sanctioned? It's going to happen whether you want it to or not, and isn't it time to start looking at that as perhaps the future?

Shimmin: That's already happened, Dana. Otherwise, how can you explain the preponderance of SharePoint servers running around? That stuff is not being bought top-down.

As I was saying a little bit ago with some of the vendors I'm talking to, trying to go around IT, they're realizing that this culture exists within the enterprise of wanting

I do think we are at a point where there are some basic structural changes that are happening, but at the same time, the old rule still applies.

to make use of the self-starting tool that Jim talked about. So that age is already upon us.

IT's challenge is to be able to allow those to happen and to encourage them to happen without locking them down, controlling them, and destroying their ability to make people in the enterprise more productive and flexible. As we've been talking about here, it's really a two-fold thing we're after in this age that we're talking about.

One is, the lightweightness of the infrastructure, getting rid of the Ford iron underneath the car. The second is to make the people on the line more valuable to us. It's no longer the Nubians pulling stones up to make the pyramids, it's the, Nubians are the stones and the pyramids for our companies. We are the companies.

The people in them are the ones that drive their potentiality. As an IT person, working in IT, you really have to sort of say, "I know that I have people that have the ability to do start their own software. And, I know that top-down I'm really not getting any support for this. So, I've got to find a way to stay relevant to those people, make their lives easier, and allow them to adopt the software and to make a go.

How that happens, I really couldn't tell you. It depends on how the software that the folks are using is built.

Gardner: Ron Schmelzer, is it fair to say that a company that can't transform its IT is doomed to fail?

Dooming the company

Schmelzer: We're not taking from any recent book titles, are we now? Service-oriented IT technology is a core to every company. So, not managing information, which is one of the four primary resources of the company, is effectively dooming the company to fail.

Bringing it back to the automotive and banking industry companies, clearly what brought the automotive companies to the current state is the fact that they just weren't selling a lot of cars. And, the fact that they weren't selling a lot of cars has to do with the economic situations -- if people can't borrow money, they can't buy cars -- and also, they weren't producing cars people wanted. So the question is, how would IT have helped there?

Maybe it was understanding better how to process the information that they had at their fingertips. Maybe some better intelligence on how to spot trends ahead of time might have allowed them a year ago to start paring back production and anticipation of the flattening demand or something like that. But, that's not information technology, that's just information.

Sometimes, we, as technologists, tend to put too much emphasis on the second half of that word information technology and say, "Well, information technology is about the technology."

Gardner: It's also how people use the information, right?

Schmelzer: I would argue that it has very little to do with the technology. Information technology has almost entirely to do with information. If all we're doing

Banks had sophisticated analytics to look at the risk, at what they were doing with the mortgages, the subprime, and so forth. But, human factors overrode that technology and those capabilities.

is putting more barriers between the business and the information by throwing technology, we're really making the problem worse.

Gardner: Joe McKendrick, what do you think? How do we emphasize process and people, but, at the same time, recognize that the business and the technology are maybe necessary cinder blocks on the feet? How do we get these all to move together in a fleet way or do we wait for the bad ones to go out of business?

McKendrick: Wow! Do I have to answer that?

Gardner: Yeah.

McKendrick: Okay.

Gardner: Well, I have another question for you if you don't want that one.

McKendrick: No, no, I'll take that one. Ron, you just hit the nail right on the head. If we look back at the chain of events that led to the financial meltdown, the problems of the auto industry, the turbulence in the global market that caused the oil prices to go up, it stems back to the real-estate crunch and the mortgage crisis, the tools were there.

Banks had sophisticated analytics to look at the risk, at what they were doing with the mortgages, the subprime, and so forth. But, human factors overrode that technology and those capabilities. I'm going to say it was greed, simple greed.

The market was booming and everybody wanted to pile on, despite what the risk management systems might have been telling them. Therefore, you have a case where the technology is there, the information technology. As Ron was saying, the emphasis on technology is there. We have great tools, but there is the human factor and those business cycles.

Gardner: Clearly, the technology needs to be there, but perhaps doesn't need to be visible. The transparent notion that Brad has makes sense, or maybe we need to be the "post-IT era." The IT has to be there, but under the covers, convenience and information become essential, along with the ability of people to act on it.

New tools and information

McKendrick: There's a lot of talk about this being Great Depression 2.0. Fortunately, that talk subsided, but we have a lot of tools and information. We were able to sidestep a major disaster, such as we saw on the 1930s, because we had more information. We're able to act on the information. We have the technology.

Gardner: I think that's true.

Schmelzer: It's very interesting. Tony, maybe you could piggyback off of this. You live in an art capital there -- New York. After the Realism movement in art, we got to the phases of the Modernism movement. We moved from over-complexity to over-simplicity. It's quite possible that we might be doing that here in IT. Our next big movement in IT might be to shed all this complexity and perhaps oversimplify for the sake of trying to solve some of the problems of our over-complex Baroque history here.

Baer: I'm almost tempted to say that we're going to go into a postmodernist era. Joe was talking just now talking about how we used information fairly effectively to, at least for now, forestall a Depression 2.0, but it also brings me back to one of the things that Dana mentioned in the invites to this podcast, talking about some of the technologies that were out there -- and one of them being CEP.

Who were the folks who were using it all these years? It was a lot of the financial services, the Wall Street houses, all the folks who were doing derivatives. Did that prevent a crash, when essentially human behavior, human greed, let us down? We had all this technology to analyze all these risks, but we didn't use common-sense risk management.

Gardner: That's right. They had their emphasis on the complex events, but they couldn't step back and see the less complex events, which is, "You've got too much leverage, pal."

Baer: Exactly, exactly. In that sense, we became a slave to the technology we had.

Kobielus: Yeah, that defines the era. I'm glad you brought CEP back into this. The era that we're living in now is an era of wild volatility. Everything is crashing around us. It feels like it. If it isn't crashing around us, we hype it in our own culture.

This morning I twittered on the Swine Flu so-called pandemic. When did they stop being epidemics and become pandemics? And, when does a disease that's only killed a little over 100 people suddenly become equivalent to an outbreak 90 years ago that killed, was it [50 to 100] million people worldwide?

Shimmin: More than World War I [with 15 million killed].

Kobielus: The financial industry has for a long time been used to volatility. That's what they're about. That's the stock market. It's a volatile bouncing of prices, trades, and whatever. That sector has been built on volatility and on

What we live in right now is an era where everything conspires to give you a massive headache, a massive migraine all the time.

volume -- just increasing volumes of transactions, data, and a broader variety of transactions. It's The Big Vs: Volatility, Velocity, and Variety of events, flowing in to the financial institutions, all the time, continuously.

In many ways that volatility now affects every aspect of our lives, likewise the sheer volume of stuff we all have to deal with in our personal and professional capacities, and the sheer variety of stuff too. What we live in right now is an era where everything conspires to give you a massive headache, a massive migraine all the time, because of the 3 Vs coming together.

Gardner: We should call it "the complex generation."

Kobielus: Call it "the migraine era."

Gardner: Let's come up with some other names for what we're trying to describe here. We've really done a nice job at defining what it is, but, just because we're analysts, we need to put some labels on this stuff.

Jim has got complex and migraine era. Brad Shimmin, any ideas? You said "transparency." That works, but I think it takes an explanation in addition to the word "transparent" in order for people to understand. Is there a word that we can come up with that people instantly get?

Flat-earth IT

Shimmin: Wow, small task. I guess I would say that everything we're talking about is horizontal economy, horizontal IT. IT is no longer tipped on its side, with everything falling off the slope. It's distributed out amongst the constituency that make up the business, which is both IT and the users, and the flat Earth sort of thing, which, I guess, is another popular book that's out right now. So, I guess I'd call it the "flat Earth IT era."

Gardner: Okay. Joe McKendrick, any buzzwords or über terms? What are we doing? What's going on around us?

McKendrick: A few years back, an author said the corporations are breaking down -- I think I talked about this on this podcast -- into confederations of entrepreneurs. The company of the future will be a confederation of entrepreneurs.

I'd like to call it "entrepreneurship," "Entrepreneur 2.0." How's that? IT is breaking down these large structures, these large institutions, into bite size pieces. Technology is making information accessible to all, for all to leverage. As I say with SOA, we're becoming both consumers and producers of services.

Gardner: The power of one.

McKendrick: The power of one. I like that.

Gardner: Ron Schmelzer, any ideas on the terms here?.

Schmelzer: I think we're moving in the right direction. I don't know if I'd use the term "entrepreneurial," but it sounds to me more like a populist movement. Really what we're doing is empowering individuals within the organization to have greater control over their use and provisioning of IT capabilities.

They're shifting it away from these central oligarchies of enterprise systems that have had way too much control and way too little flexibility,

IT is breaking down these large structures, these large institutions, into bite size pieces. Technology is making information accessible to all, for all to leverage.

that have not prevented any of the major economic problems we've had, and to some extent maybe even contributed by shifting our focus away from the information and too much toward the technology.

I like these populist movements in IT. Once again, just remember your IT experience at home and how much you would wish it would be in your work environment.

Gardner: So, perhaps technology, habits, and the cloud are shifting sovereignty away from countries, companies, and even groups based on geography, like villages or towns or cities, being sovereign. Having power is now shifting down to amorphous groups and even individuals.

Shimmin: It's a meritocracy, Dana. That's exactly what we're talking about.

Confederated self-determination

Kobielus: This reminds me of a project I was involved with in, of all places, the auto industry several years ago. I was writing with a guy who was a real futurist. He was talking about future virtual product coalitions. The idea is that there are too many plants located in the wrong places. We have different skill sets and different centers of demand and they need to be rationalized with it. You need to provide the flexibility, the information, and the resources in order to act, as well as the ability to enter into trading partnerships.

This employs the principles of loosely coupled. I'd look at this as confederated local self-determination.

Gardner: Individualism. They theorized about individualism back in the late 1800s -- guys like Kierkegaard, Nietzsche, and some of the other philosophers. They were called "existentialist," after a while, but they were basically focused on saying, "You are a universe of one."

Kobielus: But we're in a world where we work with other people and other entities. In other words, you don't make your own car. You don't grow your own food. You depend on other sources for that -- for sustenance. So, yes, we have more self-determination, but yes, but we are also confederated because we rely on other services, other people, and other entities.

Gardner: We only rely on other entities that are on the network though.

Kobielus: Yeah, we are interdependent.

Schmelzer: It's the information economy that we're talking about here specifically. The other thing that's pushing us here is that if you've been observing the trends in the IT industry moving toward massive consolidation, while there's always going to be new venture creation, that's just part of the engine that is

In order to get reuse, which is what people talk about all the time, you have to have legacy. Just think, if you're never keeping anything around long enough, you're never going to get reuse.

venture capital and the capital system. The bulk of IT spending is becoming increasingly concentrated with a smaller and smaller set of companies.

So, from an enterprise IT experience, we're starting to drive the wedge between buying technology from an increasingly shorter list of vendors who are becoming über suppliers. This set of freely available technology just doesn't compete with that enterprise consolidation purchasing cycle. As this consolidation happens, it's going to exercise even more of the ability to say, "If we're not going to go the route of 'pick your handful of vendors here.' then you can go this plethora of other technologies that are really up to you as the individual to choose." That's what's happening in this economy.

Gardner: It's interesting. Just as we're embracing cloud, we're also seeing that, if you have a couple of mainframes, you can create a cloud. You could provide services out to a public constituency, or you could take your old mainframe inside the enterprise and put some new hubcaps on it. Then, you're able to do all sorts of application hosting and co-location services and act like an IT shared-services organization. So, it's back to the future in terms of both the ends and the means, right?

Schmelzer: Actually, both of those visions are not inconsistent with each other. That's the irony of it. In order to get reuse, which is what people talk about all the time, you have to have legacy. Just think, if you're never keeping anything around long enough, you're never going to get reuse.

The irony of it is that you have to have legacy to have reuse. But, having legacy doesn't necessarily mean also not spending a lot on new things, which is the weirdness of it. Why is it that we're soaking up so much of the IT budget on legacy, if we're not creating anything new?

There's something malfunctional in the way that we're procuring IT that's preventing us from getting the primary benefit of legacy, which is extracting additional value from an existing investment, so that we can make the old dog get new tricks and get new capabilities provisioned on a cloud, without having to invest a huge amount in infrastructure.

The biggest behavior that has to change is IT procurement. It has to fundamentally change, move away from these multi-million dollar software-provisioning cycles, and really think much more about the existing IT environment and enabling the populist economy.

Gardner: Brad Shimmin, is it possible that the cloud makes a lot of sense and even the mainframe and centralized models make a lot of sense, but client-server and distributed computing got in the middle to become the complexity roadblock?

What really matters

Shimmin: Certainly it is, but let's just go back to what we were talking about. To me, whether it's mainframe or a bunch of PCs on Google's data center doesn't matter. What matters is what it does. If we're able to make our existing mainframes do new tricks, that's really great, because it allows us to make use of investments we've already made.

That's why, when I look at things like SaaS, I see it being more beneficial to the vendors who are providing those services than to the customers using them. Instead of having something they can depreciate over time, they just have to pay it out every month like a telephone bill. You don't ever own your services -- you're just paying for them, like leasing a car versus owning a car.

Kobielus: I have a new theme. It's not the "migraine era," but rather it's the "era of seamless scavenging." All this legacy, all this functionality, on-demand access through clouds, mashups, and so forth, means each of us can immediately self-provision by scavenging all the rich functionality, all the data that's out there to be gotten in this environment for seamless scavenging.

Shimmin: Dana, back to your question to me, that's exactly what client-server does. I don't see it as a roadblock. I saw it as basically breaking down those assumptions of what the system should do. PCs had to do this. The mainframe had to

So, yes, cloud is a way of papering over all the administrative overhead. On the other hand, this isn't going to be your grandfather's timesharing mainframe.

do that. And, client-server came along and said, "Screw that. You can create your own multi-tiered environments that do different things. You can put application resources, not just in one box, but across a number of boxes."

Gardner: So that was a necessary threshold to cross?

Shimmin: Yeah.

Gardner: Okay. Tony Baer, do you think cloud computing is a response to the limitations of distributed computing?

Baer: There's no question about that, and I want to respond to what Brad was saying before about client-server being a distraction. I think it was a necessary stage to go through to get to where we are right now, to understand what we could really get out of a cloud without this being a repeat of time-sharing.

So, yes, cloud is a way of papering over all the administrative overhead. On the other hand, this isn't going to be your grandfather's time-sharing mainframe.

Gardner: We need the best of centralization, the best of distributed, but not being tied to distributed or client-server. We also need to have the ability for people to act on almost anything they can acquire very cheaply and easily through the Internet.

Baer: Client-server gave us the idea of that this is no longer a one-way conversation, from a host to a dumb slave. I want to have some capability locally.

Gardner: So, empowering was a necessary cultural shift, if not the right technological shift?

Best of both worlds

Baer: Exactly. Theoretically, if the cloud is done right, and if we use all the right enabling underlying architectures and technologies, we should theoretically be able to get the best of both worlds. I say "theoretically," because, of course, no shift to any type of architecture or technology ever goes without its own baggage.

When we thought that outsourcing was the way of dealing with staff complexities several years ago, what we realized was, if you outsource, you have to add an administrative layer. If you're going to acquire cloud or acquire cloud services, you are going to need to manage something new that you didn't have to manage before.

Gardner: I think I've come up with a word for us. If we look at what happened perhaps 500 or 600 years ago, there was a collective word that came to represent it. It was called Renaissance.

Are we perhaps at a point where there is a Renaissance in IT? Even though we thought we were enabled or empowered, we really weren't. Even though we thought that centralized and lock-down was best, it wasn't necessarily. But it wasn't until you got the best of all worlds that you were able to create an IT-enabled renaissance, which of course cut across culture and language, individuals, even the self-perception of individuals and collectively. Does anybody like the idea of "renaissance" IT or computing?

Baer: Just as long as we don't have to go through the Black Plague before it.

Gardner: All right, does that make Steve Jobs Michelangelo, what's going on?

If you're going to acquire cloud or acquire cloud services, you are going to need to manage something new that you didn't have to manage before.

Schmelzer: Well, I'm sure he is painting on the Sistine Chapel. We're definitely moving into some new arena. That's not to say that it's a generational thing, but it is true that young generation, and I'm on the cusp here myself, has been raised with information technology. A lot of the perceptions of information technology actually are different, just in general.

For example, 20 years ago, when we first put cameras up in the streets, the biggest concern was privacy, especially in the UK. People said, "Oh, they've got cameras everywhere. It's going to intrude into my privacy." Twenty years later, what do we do? We take pictures of ourselves and we post them on Facebook. So what just happened there?

In one instance, we were concerned about the cameras intruding our privacy. The next thing, we are the greatest cause of our privacy concerns, and nobody cares. What's happening in IT is that we're hung up, to a certain extent, generationally on what we expect the IT department to do and how it works, the whole budgeting process, the IT payment process, and all sorts of stuff.

But, we're raising a generation of people who can go online and within five minutes create a highly interactive website, with video, chat, forums, post documents, and do all the sort of stuff that would have taken probably a team of 20 with a few million dollars and many months to do, probably in a less efficient way. So how is this going to work?

Gardner: That was only five years ago.

Do it yourself

Schmelzer: Right. So how is it going to look when these guys go into the work stream and you tell them that some portal project is going to take six months? It's just laughable. They'll just say, "Forget it. I'm just going to go online to Google and do it myself."

Shimmin: They'll say, "There an app for that."

Gardner: Right. And, that's why it could be a new renaissance of productivity, bottoms-up, grassroots. Eventually, the big institutions of the old order will either adjust or completely crumble.

Schmelzer: Even more, I think we're looking at a renaissance of the organization of IT, of the IT department, if you will. The IT department could potentially become endangered itself, not the organization as a whole. Businesses operate on economic terms, not necessarily on technology terms.

If the IT department continues to increase the digital divide between the home IT experience and the work IT experience, then these people are going to go to work, they're going to watch the thing done, and when the IT department says no, then they're just going to do it themselves.

Gardner: And whoever does it faster, better, cheaper ends up having quite an advantage in the marketplace.

Schmelzer: So, the IT department really is at a risk at this point.

Gardner: Okay, we have to leave it there, I'm afraid. We're out of time. But, we've had an interesting discussion that has led us to perhaps the concept of a new renaissance and how IT is going to adjust, exploit, or perhaps even diminish in its role as a result.

I want to thank our panelists. We've been talking with Jim Kobielus, senior analyst at Forrester Research. Thanks Jim.

Kobielus: Yeah, always a pleasure.

Gardner: Brad Shimmin, senior analyst, Current Analysis. Thank you, Brad.

Shimmin: Thank you, Dana.

Gardner: Joe McKendrick, independent analyst and prolific blogger on software and enterprise subjects. Thank you, Joe.

McKendrick: Thanks, Dana. It was fun.

Gardner: Ron Schmelzer, senior analyst at ZapThink. Thank you, Ron.

Schmelzer: It was a pleasure being on this drug trip with you.

Gardner: And Tony Baer, senior analyst at Ovum. Thank you, Tony.

Baer: Better late than never.

Gardner: I would also like to thank our sponsors for contributing to the underwriting in support of the show. That would be Active Endpoints and TIBCO Software.

This is Dana Gardner, Principal Analyst at Interarbor Solutions. You've have been listening to BriefingsDirect Analyst Insights Edition. Thanks for listening and come back next time.

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Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 41 on the current state of information technology and defining the best description of the next era of computing. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.